What's Happening?
In 2025, several African currencies experienced significant declines, with the South Sudanese pound and Ethiopian birr among the worst performers. The South Sudanese pound's depreciation was largely due to the country's heavy reliance on oil exports,
which were disrupted by regional conflicts. This led to a sharp decline in foreign currency inflows and a surge in inflation to 107.9% by September 2025. Similarly, the Ethiopian birr fell by more than 15% against the US dollar, driven by dollar shortages, inflationary pressures, and investor concerns. These currency declines reflect deeper structural issues within these economies, including over-reliance on single export commodities and complex debt restructuring challenges.
Why It's Important?
The weakening of African currencies has broader implications for economic stability and investor confidence in the region. Currency volatility can deter foreign investment, as exchange rate losses can quickly erode returns. Local businesses also face challenges in planning and growth due to fluctuating import prices and operating costs. The economic instability in countries like South Sudan and Ethiopia highlights the need for diversified economic strategies and improved fiscal management. The situation underscores the vulnerability of economies heavily dependent on a single export and the importance of addressing structural economic weaknesses to foster long-term growth and stability.
